The Hong Kong Stock Exchange (HKEx) has announced plans to begin phasing out the issuance of physical share certificates as the exchange attempts to create a purely electronic, scripless share registration system.
In response to an earlier consultation exercise, the exchange will initially focus on a gradual computerisation of the share ownership records held in the Central Clearing and Settlement System from next year. However, most of the certificates, either held in fourteen separate registers or in the hands of private investors, will remain undigitised.
At present, approximately six million records are held in the central depository, whilst some 24 million certificates exist outside the main database.
HKEx head of clearing Stewart Shing Shin-cheung commented: “We believe this initial step toward a scripless environment is an important development in further enhancing the competitiveness of Hong Kong's securities markets through pursuing greater efficiency, shareholder transparency and lower operational costs."
The government plans to submit a proposal in the Legislative Council in September that will enable the necessary legal changes needed to begin phasing out paper certificates.
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